from the of-course-that's-the-plan... dept

We were just talking about how three strikes hasn't done anything to actually increase sales. Instead, as many, many people predicted, sales have continued to decline. Of course, perhaps treating your biggest fans as criminals is not a particularly wise strategy. But, then again, the big entertainment legacy players aren't exactly known for wise or thoughtful strategies.

With France, the biggest supporters of a "three strikes (accusations) and we kick you off the internet" plan facing pushback from the government, it appears that the industry folks have hit on their latest ridiculous strategy. Rather than kick people off the internet, why not take a page from copyright trolls, and force them to cough up money. Yes, indeed, it appears that the entertainment industry is looking to turn "piracy" into a "business model" by forcing people they accuse (not convict) of infringement to pay up in large masses. Except, rather than using shady dealings via questionable court procedures, they're just hoping to roll it into existing three strikes plans:

UPFI, (Union of Independent Phonographic Producers), said that it agreed with the opinion of French music rights group SACEM that a disconnection regime should be replaced with warnings along with fines of 140 euros.

PCInpact contacted Jerome Roger, Director General of UPFI, who confirmed the group is indeed in favor of such fines.

This leaning towards cash penalties is also endorsed by Warner Music President Thierry Chassagne. In recent comments Chassange suggested that not enough punishments have been handed out under Hadopi and that a deterrent is necessary.

In other words, if kicking people off the internet isn't getting them to give us more money... how about we skip that middle step and just force them to give us money. It is, clearly, taking a page straight out of the copyright trolling handbook.

According to French publication Numerama, this new direction is basically a done deal in France. And, of course, once it shows up there, expect the same sort of things to start popping up around the globe quickly. The industry doesn't spring stuff like this in just one place alone. There's a global strategy behind it.

from the somewhere-in-DC,-Lamar-Smith-experiences-inexplicable-arousal dept

From SOPA/PIPA to the Digital Economy Act to ACTA to the DMCA, there's no shortage of bad legislation built to serve various copyright-driven industries. But just when you thought you'd seen the very edge of how far legislators were willing to go, someone comes along and tops it.

The 510 Bill gives new powers to an administrative branch of the Ministry of Commerce and Industry called the General Copyright Directorate (Dirección General de Derecho de Autor, henceforth DGDA). Unlike similar copyright administrative offices around the world, the DGDA will have the power to impose fines on infringers without prejudice of further criminal or civil actions.

It's exactly what it looks like: the Panamanian copyright office is being given the power to chase down filesharers and fine them up to $100,000 PAB ($100,000 USD). In addition, the "without prejudice" portion means that filesharers can still be pursued by rights holders, even if the government has already levied a fine.

The bill goes even further than this astounding bit of rent-seeking:

[T]he DGDA has the power to unilaterally haul any alleged infringer, ask them to mount a defence within 15 days, impose fines of up to $100k USD ($200k for re-offenders), and on top of that this person may still have another civil case against them added to the administrative fine. Adding insult to injury, they also have to pay for the publication of the fine so that everyone knows what a nasty pirate they are.

So, you have a government entity pursuing citizens for copyright infringement (a civil matter, or so it used to be...), an act which opens them up to further civil action from the rightsholders. With this kind of enforcement, the Panamanian creative industries should be rolling in extracted filesharer dough. Or so you would think, if this bit of wording wasn't present in the bill:

The funds accrued by the General Copyright Directorate from the fees for the services it provides and the fines imposed in the exercise of its powers, will be aimed at improving its operational infrastructure and to boost the performance of its officers, complementary to the funds that the State Budget reserves for the operation of the entity[...]. The amounts corresponding to each official, shall not exceed fifty percent (50%) of the total basic salary monthly remuneration.

That's right, none of it goes back to the rightsholders. These fines get fed right back into the system that levied them. Not even back into the government in general, but directly back to the DGDA. Wow. How could that possibly be abused?

This is what I think will happen if the law passes as it stands. The DGDA will immediately try to monitor all torrent use in Panama, be it legitimate or not, and all people identified with IP addresses will be summoned and summarily fined. After all, the institution and its employees will have a direct financial incentive to assume guilt. Then those same people will be sent again and again, as there will be clear incentive to fine re-offenders.

Well, that's sounds like all the fun of copyright trolls combined with the "answer to no one" power of the government all rolled up into big ball of perverse incentives. I suppose the government will turn these filesharers over to the rightsholders once it's drained them of money to toy with the drained corpse through civil proceedings.

Meanwhile, the industries seeking this sort of protection will find that no one has any money left to purchase their products, much less pay off another set of hefty fees. While this may provide the rightsholders with some sort of second-hand vindictive high, it's hard to see how this betters their financial situation in the least.

Technollama calls the legislation "toxic." It is. And more than that, it's completely perverse in every sense of the word. It hooks an agency up to an IV full of money and trusts it not to repeatedly press the "dispense" button. Sure, it may cut down on infringement, but once a government agency is hooked on steady income, it usually comes up with new (and worse) ways to keep the buzz going. The dollar amount of the fines will be ratcheted up and the definition of "infringing activity" will become broader, perhaps encompassing such maximalist wet dreams as embedded video. It's ugly, any way you slice it.

from the follow-that? dept

Well, this is confusing. A few months ago, we wrote about how a composer, Melchior Rietveldt, was in a weird situation in which the song he wrote for a Dutch anti-piracy effort was showing up on DVD anti-piracy ads -- even though his contract quite specifically limited the use of the work to a local film festival. When he discovered that his song was all over some top selling DVDs (including Harry Potter) he sought compensation, going to local music collection society Buma/Stemra, asking them to get the $1.3 million he believed he was owed. Buma/Stemra initially ignored him, and then there was a weird situation in which a Buma/Stemra board member tried to offer to "help" Rietveldt, with some questionable conditions attached, including getting a cut of the money owed.

Apparently, the latest in the case is that Buma/Stemra has now been told to pay Rietveldt €20,000 and attorneys' fees -- and to continue its efforts to get him the royalties actually owed. And yes, this seems a bit confusing. Remember, it was the anti-piracy group and the movie studios who appeared to violate his copyright (yes, on his anti-piracy song). Buma/Strema's job was supposed to be to collect the money. So how is it that they're now the ones being fined? It appears some of it becomes a contractual issue in which Buma/Strema promised to try to collect the fees owed, but apparently didn't do enough after it decided it would be too much work to actually track down those who used the song. The judge in the case noted that, at the very least, Buma/Strema had a duty to inform Rietveldt that it had given up after promising otherwise. Either way, the end result is that the collection society now owes Rietveldt more money and has to continue trying to collect even more. All over an anti-piracy song that was pirated by anti-piracy groups (mainly NVPI, who is apparently the parent group for the well-known anti-piracy organization BREIN).

from the now-watch-who-it's-used-against dept

For years, we've discussed how the US has put all sorts of pressure on China to boost its intellectual property enforcement regime -- and each time we warn that this is going to backfire in a big, bad way. To "appease" the US, China keeps ratcheting up its enforcement... but seems to have a habit of doing so in ways that hurt foreign companies. And, even though China declared its supposed copyright crackdown a "success," under increasing pressure to change its IP laws, China has announced plans to double the "fines" for infringement up to 1 million yuan (~$158,000). That seems perfectly in line with the ridiculous statutory rates currently found in the US, but seems even more out of place in China where the average citizen makes a lot less than the average American. Not that there's likely to be much of an effort to use such a law, but laws like these don't get people to respect copyright more. They do the opposite. When the penalties are so out of proportion to the action, no one takes the law seriously.

from the urls-we-dig-up dept

There doesn't seem to be a "Black Friday" for getting good deals on booking flights. Maybe there is a single day of the year to buy really discounted plane tickets -- if you know what day that is, please let everyone know in the comments. But technically, it probably takes more than a single day of ticket sales for the airline industry to get into the black for the year. In any case, here are some more stories about airlines and how they treat their customers.

from the that's-a-costly-line-break dept

Remember when Egypt wasn't quite sure how to deal with protests in the streets, and the government decided the best course of action was to cut off the internet (because nothing attracts the travel business like a capricious and arbitrary government, running around like crazy, just because citizens start speaking up). However, then President Hosni Mubarak probably should have thought twice before hitting the kill switch. Apparently he (along with two other officials) has been fined something close to $34 million for shutting down the internet:

The court ruled that Mubarak, Nazif and Adli were guilty of "causing damage to the national economy" and the fines would be paid to the country's treasury.

from the that-seems-just-a-little-hypocritical dept

It's no secret that Wikileaks' Julian Assange is a man of many contradictions, who has what appears to be a vindictive and angry streak against those who disagree with him on certain plans. However, now reports are coming out that he made his own associates sign an incredibly draconian non-disclosure agreement which threatens anyone who leaks documents from within Wikileaks with the potential for a $20 million penalty. I guess, you could argue that since he recognizes how much leaking goes on, that it makes sense to put in place extreme penalties. Of course, the alternative explanation that many seem to prefer is that he's just annoying, paranoid and, at times, more than a bit hypocritical.

from the nothing-to-see-here... dept

While US courts have been awarding tens of thousands of dollars per song for the few people found guilty of unauthorized file sharing, many people have noted how utterly ridiculous those awards are, in comparison to any actual harm. It appears that a court over in Sweden appears to agree. A man who was charged with sharing 44 songs has been fined a much smaller amount, specifically, 2,000 kronor, or about $300. It actually comes out to just about $7 per song.

It will be interesting to see how the industry reacts to this one. After all, they've been going around praising the IPRED anti-piracy law in Sweden for the last two years now. Will we suddenly start hearing about how Sweden "doesn't take piracy seriously" and then there will be a new push for even stricter laws?

from the moving-on... dept

As ACS:Law's legal mistakes mount, there was a recent story about how the company had passed on some collections efforts to a firm called GCB, but the details suggested another total screwup. People tracked GCB back to an accounting firm, which quickly put on their website that while GCB was formed by it, it "appears to be being misused by some third party," and that it was "taking urgent steps" to end this. The details suggested some odd maneuverings:

When PC Pro spoke to McLean Reid partner John Champion, he told us that GCB had been registered at that address on behalf of one his clients, David Fisher.

Champion said that Fisher had lent his dormant company to an associate, who had been collecting the file-sharing money without his knowledge. "He just decided to help a friend out," Champion said. "He wanted a dormant company, and he said 'Oh I've got one that's not doing anything, you can have that'."

"I know Dave Fisher is put down as a director [of GCB], [but] this activity was done without him knowing what activity was happening," Champion added. "I think he's taking steps to make sure all that money's been repaid."

The "friend"? Yeah, according to PCPro, it turns out that it was Andrew Crossley, the guy from ACS:Law. Either way, it seems that all this attention has scared Fisher off. An anonymous tipster alerts us to the news that if you call the phone number that GCB tells you to call to pay up, you get the following message:

"If you have received a letter from GCB Ltd please disregard this letter as GCB is
no longer pursuing the matter stated in the letter."

Seems like Crossley and ACS:Law are going to have to try the next option.

from the protectionism-at-work dept

Paul Keating sent this one over a few weeks back, but just got around to going through the details. It appears that, as of January 1st, California (rather quietly) greatly increased (mostly doubled) the fines for "piracy" and "counterfeiting," while expanding the definitions of what qualifies for these new fines, by passing two laws (pdf) late last year, based on questionable reasoning:

According to its provisions,
AB 819 was intended to increase the state's tax base and stimulate the economy by safeguarding
the legitimate sale of intellectual property, and to send a strong signal that California is
committed to protecting the intellectual property created by innovation and entertainment
industries in the state.

In other words, here's a gift to Hollywood so that it will pay more taxes. As for the specific reasoning behind these bills, it gets more laughable the deeper you dig into the specific text of the bill which is summarized in the document above. However, let's go through the full findings:

(a) According to a 2007 study by the Institute for Policy
Innovation, intellectual property piracy, meaning the theft of
movies, music, software, and video games, costs the United States
economy $58,000,000,000 each year.

This one is just sad. The IPI's "methodology" for calculating such numbers has been debunked over and over and over again -- most thoroughly by Tim Lee years ago, in which he highlighted how their methodology involved double, triple, quadruple counting of the same exact dollars to come up with their ridiculous sums. Of course, rather than improve their methodology, IPI's response was to try to get Tim fired from his job. That the State of California would base significant legal changes on such a methodology is downright scary.

(b) The problem of intellectual property piracy continues to grow
worse. A 2005 Gallup study found that 5 percent of Americans had
purchased, copied, or downloaded counterfeit music in the preceding
year. By 2007, this number had jumped to 9 percent. The percentage of
respondents that admitted buying a pirated movie rose from 3 percent
in 2005, to 6 percent in 2007. At the same time, once robust DVD
sales have flattened over the past few years, while CD shipments to
retailers have plummeted.

Correlation is not causastion. Doesn't anyone in politics know this?

(c) The effect of intellectual property piracy on California and
its citizens is particularly dire. Intellectual property piracy
adversely affects the California economy, eliminates jobs, and
damages industry. According to the Business Software Alliance, in
2003, software piracy alone cost the California economy more than
13,000 jobs, over $802,000,000 in wages and salaries, over
$1,000,000,000 in retail sales of business software applications, and
roughly $239,000,000 in total tax losses.

The BSA's numbers are even more ridiculous than the IPI's and have been debunked over and over again. Even the company that put together the numbers for the BSA had admitted that the BSA clearly exaggerates what they mean. For example, the BSA still insists on using a 1:1 unauthorized copy = lost sale argument, which anyone with an ounce of common sense knows is laughable.

These are the kinds of stats that the GAO had specifically warned governments not to believe. So why are California politicians believing them?

(d) Intellectual property piracy poses a significant threat to
consumers, who, through no fault of their own, are often deceived or
deliberately misled, or both deceived and deliberately misled, as to
the nature of purchased products, whereby pirated goods are palmed
off, including in electronic form, as legitimate authorized goods.

Citation needed. Seriously. A major citation is needed here, because the studies we've seen suggest something quite different. They suggest that, quite rarely are consumers confused. In fact, multiple studies have shown that counterfeiting usually isn't a problem, because people know what they're buying, know they're fake, and often use them as incentive to save up for the real version later. Furthermore, many other studies have shown that the actual impact of counterfeiting is a tiny fraction of what the industry claims.

(e) A growing number of criminal organizations worldwide are
involved in intellectual property piracy.

This is both questionable and misleading. This claim has been tossed around for years with little in the way of actual evidence to back it up. Yes, there are some organized crime groups involved in counterfeiting operations, but most of this bill is about infringement of digital goods. This is an attempt to conflate the two issues since the actual reasons for such a legal change is so incredibly weak.

(f) This act will send a strong signal that California is
committed to protecting the intellectual property created by
California's innovation and entertainment industries.

(g) Finally, by safeguarding the legitimate sale of intellectual
property, California will increase its tax base, and stimulate the
economy.

That one sort of speaks for itself. Basically, here's a bill designed as a favor to our friends in Hollywood. As for the claims that it protects the tax base, that's also been debunked, as it's been shown that such infringement almost certainly helps other industries at a much greater rate -- and those industries pay more in taxes. Plus, all the money not spent on these things doesn't just disappear, but still is spent in the economy (and taxes are paid on it).

It's pretty sad to see California passing laws like this based on such ridiculously bad and debunked evidence.